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U.S. Trade Representative Kirk Announces U.S. Challenge to Europe in Aircraft Trade Dispute

03/30/2012

Washington, D.C. – United States Trade Representative Ron Kirk announced today that the United States is requesting the establishment of a World Trade Organization (WTO) compliance panel to address the European Union’s (EU) failure to remove WTO-inconsistent subsidies to Airbus.

“We refuse to stand by while American businesses and workers are disadvantaged,” Ambassador Kirk said. “The European Union’s aircraft subsidies have cost American aerospace companies tens of billions of dollars in lost revenue, which has cost American workers their jobs and hurt their families and communities. By taking this action today, we are reiterating the Obama Administration’s commitment to ensuring that every one of our trading partners plays by the rules, and that American companies can compete on a level playing field. The United States remains prepared to engage with the EU in any meaningful efforts that will lead to the goal of ending subsidized financing at the earliest possible date.”

In June 2011, the WTO ruled that the EU and four of its member States conferred more than $18 billion in subsidized financing to Airbus, and that European government launch aid had been used to support the creation of every model of large civil aircraft produced by Airbus. The WTO found that these subsidies caused Boeing to lose sales of more than 300 aircraft and to lose market share throughout the world. In fact, in looking at the effect of the EU subsidies, the Appellate Body confirmed the Panel’s finding that, among the most plausible scenarios was that “[w]ithout the subsidies, Airbus would not have existed… and there would be no Airbus aircraft on the market. None of the sales that the subsidized Airbus made would have occurred.” In contrast, the WTO rejected the EU assertion that U.S. subsidies were responsible for the viability of Boeing’s large civil aircraft production.

In December 2011, the EU claimed to have removed the WTO inconsistencies, but provided no evidence to support its claims. However, the EU has not removed its WTO-inconsistent subsidies and has even provided new ones. To provide the EU with an additional opportunity to explain its claims, the United States held consultations with the EU in January 2012. The EU was unable or unwilling to substantiate its claims to have addressed the WTO inconsistencies, and the consultations failed to resolve the dispute.

The United States has asked for a meeting of the WTO Dispute Settlement Body on April 13, 2012, to address this issue. Pursuant to an agreement between the United States and the EU, a panel will be established at that meeting.

The Boeing Company is the only American producer of large civil aircraft and is the largest single U.S. exporter. Boeing is headquartered in Chicago, IL, and has major facilities around the country, including in Washington, South Carolina and Kansas. The company employs more than 157,000 people and sold $31.8 billion worth of commercial aircraft in 2010. Boeing is the largest American manufacturer of commercial jetliners and military aircraft, with additional capabilities in helicopters, electronic and defense systems, missiles, satellites and advanced information and communications systems.